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MarketScreener Homepage  >  Equities  >  Italian Stock Exchange  >  Fiat Chrysler Automobiles    FCA   NL0010877643

FIAT CHRYSLER AUTOMOBILES

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Fiat Chrysler Leaps on Merger News, Peugeot Shareholders, Suppliers Fret

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10/31/2019 | 06:57am EST

By Max Bernhard

Fiat Chrysler Automobiles appeared to get the better deal in its merger agreement with Peugeot, analysts said Thursday, with the Italian-American car maker's shares soaring while the French company's plunged.

"It's not hard to understand this reaction when you consider the job done by Peugeot management over the last five years, while Fiat Chrysler management have overseen a tired product line and little in the way of innovation, in response to the challenges that are facing the sector as a whole, which include, but aren't confined to, electric and driverless cars," CMC's Michael Hewson said in a note.

Fiat Chrysler and Peugeot shareholders will each initially own 50% of the new company, with John Elkann, Fiat Chrysler's chairman, as chairman and Peugeot's Chief Executive Carlos Tavares as CEO. Fiat Chrysler will pay a special dividend of 5.5 billion euros ($6.1 billion) and distribute its unit Comau to shareholders, while Peugeot will distribute its 46%-stake in auto parts maker Faurecia to its own shareholders.

Citi analyst Raghav Gupta-Chaudhary said the deal appears to favor existing Fiat Chrysler shareholders who benefit from the cash distribution, while Peugeot's shareholders "are being asked to remain patient."

At 1126 GMT Fiat Chrysler shares were up 8.6%, while Peugeot was down 14%.

The impact of the deal extends beyond the car makers, with several suppliers trading lower following the news, which would create one of the world's largest auto makers by volume with a market value of $48.4 billion. Faurecia was down 2.9% and Valeo traded 2.4% lower. German suppliers Schaeffler, Leoni AG and Continental AG were down 5.1%, 3.2% and 2.1%, respectively.

"Part of the motivation for a PSA-FCA deal are procurement savings," said Kai Mueller at Bank of America Merrill Lynch.

The deal is bad news for suppliers who have already been struggling with pressure for discounts from car makers amid a global slowdown in demand. Consolidation in the sector means car manufacturers could ask for higher discounts based on higher volumes.

Write to Max Bernhard at max.bernhard@dowjones.com; @mxbernhard

Stocks mentioned in the article
ChangeLast1st jan.
CONTINENTAL AG 0.98% 111.62 Delayed Quote.-3.16%
FAURECIA 2.60% 44.67 Real-time Quote.-7.00%
FIAT CHRYSLER AUTOMOBILES 0.51% 12.268 Delayed Quote.-7.02%
LEONI AG 1.42% 12.13 Delayed Quote.17.25%
PEUGEOT 0.83% 19.5 Real-time Quote.-8.45%
SCHAEFFLER -1.01% 9.208 Delayed Quote.-4.36%
VALEO 0.19% 27.05 Real-time Quote.-13.88%
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Financials (EUR)
Sales 2020 109 B
EBIT 2020 6 821 M
Net income 2020 4 281 M
Finance 2020 5 209 M
Yield 2020 5,41%
P/E ratio 2020 4,46x
P/E ratio 2021 4,37x
EV / Sales2020 0,13x
EV / Sales2021 0,14x
Capitalization 19 230 M
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Technical analysis trends FIAT CHRYSLER AUTOMOBILES
Short TermMid-TermLong Term
TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 15,86  €
Last Close Price 12,27  €
Spread / Highest target 128%
Spread / Average Target 29,2%
Spread / Lowest Target -14,4%
EPS Revisions
Managers
NameTitle
Michael Mark Manley President, Chief Executive Officer & Director
John Jacob Philip Elkann Chairman
Richard Keith Palmer Chief Financial Officer & Executive Director
Harald J. Wester Chief Technology Officer
Andrea Agnelli Non-Executive Director
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